A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

November 30, 2005

I'd like to say great minds think alike, but in this case, you'll see that even back in 2004, some smart folks were already predicting what we're not seeing today - and hey, even a future great name for a blog (coincidence I swear - but great name eh?)

Bottom line - there are some classic bubble/mania books, like Manias, Panics & Crashes which I recommended last week. And there's classic bubble predictor articles like this one, or ones from 1999 about the NASDAQ.

The only problem with bubble articles and books though is predicting the exact date of the POP! Documenting the reasons, exploring the fundamentals, describing the behavior - all easy. But when does irrational exuberance peak? When does froth spill out of the cup? That's tough. I'm gonna say this housing bubble peaked the day I launched HousingPanic - around November 1, 2005

Here's a stanza from the article.. Enjoy the read.. Thanks to a HP reader for the link...

It's not just the discipline of banks that keeps people from buying more than they can afford, but also the buyers' own fear and guilt. But in an environment where home prices continue to spiral up, fear and guilt are replaced by a sense that you're a fool not to buy the most house you can possibly get away with. A particular kind of speculative frenzy ensues, captured in a recent story in The Washington Post which detailed a new phenomenon: home buyers camping out overnight for the chance to be the first in the next morning's open house, ready to buy $700,000 houses in built-out, lush-lawned suburbs like Arlington. The phenomenon has created temporary, yuppie tent cities. The story's authors interviewed several buyers in the tented line who planned to sell their purchases back into a steadily rising market, and concluded, dryly: "There is an element of speculation to the lines."